The Effects of Customer Relationship Marketing...

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School of Management

Blekinge Institute of Technology

The Effects of Customer Relationship Marketing Practices on

Customer Satisfaction among the Customers of Ghana Oil

Company Limited

ASAMOAH, FREDA OWUSU [email protected] OR [email protected] AVOGBEDOH, SOWU [email protected] OR [email protected]

SUPERVISOR: OSSI PESEMAA.

Thesis for the Master’s degree in Business Administration

FALL 2011

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ABSTRACT

The Ghanaian economy has recently received massive growth for various reasons.

However, much of the growth is attributed to the recent discovery of crude oil in

commercial quantities. This phenomenon has led to the springing up of many Oil

Marketing Companies (OMC’S) which of latest count has 84 OMC’S and counting. This

number of OMC’s has led to the adoption of various Customer Relationship Marketing

(CRM) activities and practices to outwit other competitors in the industry. Ghana Oil

Company Limited (GOIL) is one of such OMC’s and the focus of this study.

Our study was aimed at studying the complex concept of Customer Satisfaction in the

light of the Customer Relationship Marketing practices of the company. We are aware

that in order for a company to prosper it must retain its clientele. This study will find out

if the CRM practices of GOIL are enough to keep its customers satisfied, loyal and

content.

The study made use of questionnaires and randomly selected a sample size which

signifies 10 % of the total dealer population and corporate customers and 5 lubricant

resellers.

In conclusion, it was revealed that, the main dimensions of perceived service quality in

GOIL are Tangibility, responsiveness and empathy and thus needs to be improved to

meet the customer’s satisfaction.

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ACKNOWLEDGEMENT

Our sincere appreciation goes to God Almighty through whose immense support and

wisdom we were able to begin and bring this work this far.

We would also wish to say thank you to our supervisor Ossi Pesemma under whose

guidance and direction and extreme patience led us each step of the way.

To our families for all their support and understanding, we say God bless you richly.

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Table of Contents

Chapter One: Introduction 6

1.1 Background of the Study 7

1.2 Problem Discussion 11

1.3 Statement of Objectives 12

1.4 Scope and Delimitations of Study 12

1.5 Thesis Structure 14

Chapter Two: Review of Related Literature and Studies 15

Chapter Three: Method 25

a. Research Design 26

b. Variables 28

c. Data Gathering Tools 28

d. Treatment of Data 30

Chapter Four: Results and Analysis 32

Chapter Five: Discussions and Conclusions 42

5.1 Limitations and Future Research 43

References 44

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List of Tables

Table 1 Ages of Respondents 32

Table 2 Gender and Social Status 33

Table 3 SERVQUAL DIMENSIONS STATISTICS 34

Table 4 Independent Samples Test of SERVQUAL Dimensions 35

Table 5 Group Statistics of Each Sub Items per Dimension A 36

Table 6 Group Statistics of Each Sub Items per Dimension B 38

Table 7 One-Sample Statistics for Sub-items of Satisfaction and Loyalty A 39 Table 8 One-Sample Test for Sub-items of Satisfaction and Loyalty B 40

List of Figures

Figure 1 Quality Model 31

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CHAPTER ONE

1.0 INTRODUCTION

Ghana was the first sub Saharan nation to gain independence in 1957 from the United

Kingdom. Ghana as a country has one of the most stable governments in the African

continent, and in 2011 according to a government report it had a GDP of 20.146% which

makes it one of the world’s fastest growing economies. This is not surprising because it is

the second largest producer of cocoa in the world. It also has rich gold reserves which no

doubt has contributed to the economy. But the real reason for massive growth in the

economy is the recent discovery of oil in Ghana. Oil as they say has become the next big

thing in the country and could very well make the country a prosperous nation in the

years to come. Our study will focus on Ghana Oil Company Limited (GOIL) which was

founded in June 14, 1960 merely two years after the nation gained independence, as the

AGIP Ghana Company Limited to market petroleum products in Ghana. The

shareholders back then were AGIP SPA of Italy and SNAM S.P.A who eventually

transferred their shares to Hydrocarbons International Holdings of Zurich, Switzerland. In

1974 the Government of Ghana acquired the shares of AGIP SPA of Italy and

Hydrocarbons International Holdings of Zurich, Switzerland and later renamed it the

Ghana Oil Company Limited (GOIL). It later blossomed to have the largest retail

network in Ghana for fuel and crude oil by products. Currently it has 18% of the market

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share and is one of the first Oil Manufacturing Companies (OMC) in Ghana, which as of

latest count now has 84 OMC’s and counting. This is no doubt caused by the oil boom in

Ghana which was projected by experts as capable of producing 10 billion barrels of oil.

This study will focus on GOIL’s use of Customer Relationship Marketing (CRM)

strategies and practices. The main objective of the research is therefore to determine

whether CRM activities and practices have any consequence on customer satisfaction,

loyalty and contentment.

1.1 BACKGROUND OF THE STUDY

Customer Relationship Marketing is a marketing practice that is employed by companies

to focus on customer satisfaction, retention and brand loyalty. A company’s relationship

now with a customer no longer just ends with a sale. In this fast moving society that we

live in a company can also profit by keeping a customer happy even after a sale because a

happy customer is a loyal customer. But an unhappy one would spell disaster because of

the technology that one person wields now. A simple text or blog post can reach hundreds

of people and can damage a company’s brand image, and even without technology, word

of mouth alone can affect a company’s fortunes. Various views of marketing practice

have been espoused in literature.

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The Four Wave of Marketing

One view of Customer Relationship Marketing is that it is one of the four waves of

marketing, the other three are Mass Marketing the First Wave, Targeted Marketing the

Second Wave, Global Marketing the Third Wave, and Customer Relationship Marketing

the Fourth Wave (Sanchez, John G, nd).First was Mass Marketing, and it was built on the

principle that if one created a product or service that addressed a need, customers will

surely buy it. It was very simple and cost effective. In other words, in mass marketing,

mass products and services were distributed and mass marketed. The brand did not really

matter at that time. It was more of the product or service. It was a free for all and anyone

with an idea and resources to flesh it out was welcome to join the market. This scenario is

somewhat comparable to the Oil Marketing industry in Ghana, especially now because

there are so much providers of a single product, one can say that there are more OMC’s

to choose from than the car manufactures that are available there.

Second was Targeted Marketing, this was an aftermath of Mass Marketing, since every

one was making the same products and services that were sold to the market it came with

a dizzying amount of similar products. If one wanted a product there were tons of them,

but what would make you choose one over the other, it was brand consciousness so

companies took advantage of this, and it became the birth of the brand conscious society.

So even if it was the same product the brand would make the difference. This made all

the difference in a sale and companies began to target this and created campaigns based

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on this like the Marlboro Man and other brands that still endure until now. In the Ghana

Oil Marketing industry this is very applicable because of the sheer number of OMC’s.

What would differentiate GOIL over the other OMC’s in Ghana? Furthermore what

would keep a customer satisfied enough to stay with the brand?

Third was Global Marketing this was an offshoot of targeted marketing, since products

were now becoming more diverse, so did customers. Since they now had a lot of choices.

Brands were now being marketed to people that transcended geography, it was marketing

globally, or global marketing, products like watches made specifically for runners, or a

beer for the health conscious, the customer was now the target and not just brand image,

now you had a brand that was unique and catered to a unique segment of society, like

chocolate milk for the old. Companies were exploiting targets that were getting narrower

and narrower over the world. There was no more American Brand or British Brand, there

was just the brand, and a perfect example of this is the Men’s Health magazine brand.

Not so much applicable to the Ghana Oil industry as of yet because it has yet to foray into

the international market.

Lastly, Customer Relationship Marketing appeared which is primarily focused on

customer satisfaction and retention, rather than just making a sale. It is focused more on

the after sales aspect of the business to keep customers loyal to the brand. A company’s

relationship now with a customer no longer just ends with a sale. In this fast moving

society that we live in a company can also profit by keeping a customer happy even after

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a sale, because a happy customer is a loyal customer, and in the case of an OMC, there is

always that goal of making the customer a loyal one because as long as that customer has

a car or vehicle they will need fuel and with so many choices there should be a conscious

effort to practice CRM to retain the customer and keep him satisfied. This sprang forth

from the fact that products being marketed now are not just consumables but also

services, and even if a product was consumable, a brand should always strive for loyalty

from a customer. Company’s like McDonalds and Coca Cola have thrived on this. They

have provided products that have won over customers and have made them loyal; one of

the key factors was not just the product development and marketing through

advertisements but also involvement in the community and its advocacies. It may not

target the customer directly because once you drink a bottle of Coke or eat a Burger you

don’t really have much left in terms of the product or in the case of OMC’s once the fuel

is used up you have nothing left, but what keeps you coming back is good CRM

practices, this is what was called “defensive marketing” by (Fornell and Wernerfelt,

1987), this prevented customers from defecting to a competitors brand because there was

no reason to in the first place if they are kept satisfied with what the brand has to offer, as

opposed to offensive marketing which is more expensive and time consuming for a

company to engage in.

The importance of this study on the relationship of customer satisfaction and CRM

practices with a focus on Ghana Oil Company Limited is very important since GOIL is

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one of the oldest OMC’s in Ghana and also one of the biggest, having been established

right after the independence of Ghana. This study will make a correlation between its

CRM practices and how it affects customer satisfaction, loyalty and contentment.

1.2 PROBLEM DISCUSSION

Ghana’s Oil industry is booming, this is because of two things; the deregulation of the oil

industry and the discovery of oil in Ghana. This opened up the oil industry and

encouraged new players to open up shop in Ghana. This has caused cut throat

competition in the oil industry where big players and small players are at equal footing

trying to gain new customers and keep the old. As one often quoted a study by Jagdish

N. Sheth ; it costs five times more to replace a customer rather than to keep him in the

first place (Gordon, Ian, 1999). This statement is often quoted when the topic of customer

relationship marketing pops up. This underscores the importance of keeping customers

happy and keeping them loyal to the brand. Customer Relationship Marketing was

defined by (Morgan and Hunt, 1994) as the activities designed to establish, develop and

maintain successful relationships with customers. Another stated that, Customer

Relationship Marketing’s aim is to develop customers into partners rather than just plain

customers (Bowen and Shoemaker, 2003). And yet others define it as a company’s

behavior with a purpose of establishing, maintaining and developing a competitive and

profitable customer relationship for the benefit of both the customer and the company

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(Hougaard and Bjerre 2002). Does the practice of Customer Relationship Marketing

really affect the attitudes of customers towards Ghana Oil Company Limited? What is the

state of Ghana Oil Company in terms of Customer Relationship Marketing? Are they

effective in keeping and maintaining customers?

1.3 STATEMENT OF THE OBJECTIVES

The specific objective of the thesis is to evaluate the effect of CRM practices on Ghana

Oil Company Limited, to determine if the kind of CRM activities that Ghana Oil

Company Limited is engaged in is effective in keeping its customers satisfied, content

and loyal to the company. The research will make use of the SERVQUAL instrument of

Parasuraman, Zeithaml, and Berry (1988). The research will be conducted on Ghana Oil

Company Limited customers.

1.4 SCOPE AND DELIMITATIONS OF THE STUDY

This study will be focused and limited to the CRM practices of GOIL and the effects

these practices have on customer loyalty, content and ultimately satisfaction. This study

will be confined to the target customer and dealership sample size determined in the

Method Chapter. It will be limited to the effect of CRM practices on GOIL customers

only and not to its effect on its employees or management. No other extraneous variables

or control variable were considered.

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1.5 THESIS STRUCTURE

The thesis will follow the format suggested in the Masters in Business Administration

Course Guide. Consequently, the final thesis will include an Introduction of the study

which will mostly introduce and guide the reader on what the whole topic is all about.

Then, a background of the study will follow which will emphasize the theoretical

importance and practical import of the topic that has been selected. When the background

of the study is done, the problem will be discussed so as to connect theoretical problems

with existing literature. The discussion will include arguments and references until the

problem is then established. Following this, the problems or objectives of the study will

ensue which will particularly refer to the aims and purposes of the study. The

Delimitations will then be mentioned and this will summarize all parts that are not under

the scope of the study and accordingly, it will also name what would be incorporated

within the scope of the study. The theories will subsequently be the main and most

important part of the thesis – this may also be called the review of related literature and

of studies. Within this section, theories that are important to the study will be discussed.

Next, a chapter on methodology will give details on how data was collected, gathered and

treated within the process.

It will also describe the research designs and strategies that have been employed

by the researchers in order to undertake the study and assemble findings. After this

discussion of methods and procedures, the findings and results will be next and will then

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be analyzed in the following section of the paper. Finally, conclusions and the

implications reached within the study will finally make up the entirety of the full paper.

In outline form, the discussed structure of the thesis is as follows:

1. Introduction

a. Background of the Study

b. Problem Discussion

c. Statement of the Problem or Statement of the Objectives

d. Scope and Delimitations of the Study

2. Review of Related Literature [and Studies]

3. Methodology

a. Research Design

b. Variables

c. Data Gathering Tools

e. Treatment of Data

4. Findings and Results

5. Discussions and Conclusions

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CHAPTER TWO

Review of Related Literature and Studies

This chapter will tackle and review studies and theories relating to Customer Relationship

Marketing with regards to The Ghana Oil Company Limited (GOIL) which is one of the

oldest Oil Manufacturing Companies (OMC) in Ghana.

What is Customer Relationship Marketing?

Customer Relationship Marketing has been defined as company behavior with a purpose

of establishing, maintaining and developing a competitive and profitable customer

relationship for the benefit of both the customer and the company (Hougaard and Bjerre

2002). The key words here are establishing, meaning one has to win over and attract a

customer first; this is done through a strategy called the Marketing Mix which is also

called the Four P’s. First is the Product which in the case of GOIL is the petroleum based

products and services; GOIL has a wide range of products ranging from fuel, lubricants,

bitumen, and even LPG and even insecticides, it also has services such as bunkering and

advantage card or a fleet card. These products and services give GOIL and advantage

over its rivals because it has practically everything that a consumer could ask for in an

OMC and more. Second is Price, which is a very important factor in establishing and

attracting customers since GOIL does not have a unique product all OMC’s typically

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have the same product so the pricing has to be competitive and attractive but should still

allow significant profits for the company. Third is Promotion of the product, GOIL

primarily promotes its products through traditional means of advertising such as the mass

media, but also makes use of the internet as a means of promotion. It also uses advocacies

such as social responsibility, as of late it has donated to different institutions such as

children’s homes, a leprosarium and a school for the deaf; these endeavors give perfect

product placement for GOIL and enhance the brand image. Lastly is Place or the

distribution channels, GOIL currently has the largest retail network for fuel and oil

products and currently holds 18% of the market. Maintaining customers and fostering

loyalty which in most literatures is the main goal of practicing CRM, this is to maintain a

customer’s loyalty towards the brand, as well as maintaining the customer’s satisfaction

to the brand. The others are maintaining and developing and profitable customer relations

for the mutual benefit of the customer and the company, here CRM aims to develop

certain relationships between customer and brand to satisfy a customers needs and in

effect make a company profitable.

In one study that has influenced a lot of CRM practitioners, it was stated that CRM

practices are the activities designed to establish, develop and maintain successful

relationships with customers, although these authors focused more on commitment and

trust (Morgan and Hunt, 1994). Commitment here is not just customer commitment but a

mutual commitment or enduring desire between for example GOIL and its customers to

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maintain a what called a “valued relationship”, this then would be mutually beneficial to

both parties, but what commitment is developed, by analysis for the GOIL it is the

commitment to provide goods and services that are beneficial and satisfying to a

customer, and on the customer end it would be the commitment to patronize GOIL above

all other OMC’s, such is the relationship developed in this concept. Trust is the precursor

of this kind of relationship, this is developed over time through customer experience and

this is enhanced by providing customer satisfaction and not taking advantage of the

customer by the company, because as stated the goal of CRM is customer retention and

satisfaction.

This further relates to one study wherein CRM was viewed as the management approach

that involves identifying, attracting, developing and maintaining customer relationships

in order to increase retention of profitable customers (Bradshaw and Brash, 2001). In the

context of OMC’s again underscored is the importance of identifying and attracting

customers and as previously stated, GOIL has already established through its long tenure

in the OMC industry the knack for indentifying and attracting customers because of its

diverse products and services which caters to every need of petroleum customers with not

only the basic fuels and lubricants but more, so it has identified the markets for specific

petroleum products and filled the needs, thereby attracting customers for products and

services that they offer, effectively being a one stop shop for petroleum products and

services. The wide range of ever growing products and services also helps in the retention

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of customers because if the product that they need is available with GOIL and they are

satisfied with it, customers will be retained.

Importance of Customer Relationship Marketing

This underscores the importance of CRM practices and during the last decade of the 20th

century, relationship marketing has been seen as the mainstream of thought in planning a

marketing strategy both in industrial marketing and consumer marketing (Tseng, Yi Ming

2007). Every company who aims to be competitive should always have CRM practices as

part of its business goals. This alone would underscore its importance, a company who is

bent on making money and gaining and keeping customers satisfied should always have

CRM as one of its main tools. And this could not be more important in the digital age,

where the old medium of TV, Radio and Print are no longer just the means of marketing a

product. There is the internet, social networking and the like. There is so much for a

company to capitalize on in terms of marketing a product and practicing CRM. One can

call, browse a webpage, or chat with some one aside from face to face transactions to

practice CRM. Furthermore it was stated that it costs five times more to replace a

customer rather than to keep him in the first place (Gordon, Ian, 1999). Instead of a

company spending all its resources attracting new customers it should also maintain old

customers because it is more cost effective for the company to do so.

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Customer Retention, Loyalty and Satisfaction

Since retention is the main goal of effective CRM it was stated in another study that the

key to retention is through different means and practices to ensure repeat trade from

existing customers and by satisfying their requirements above those of competing brands

(Gordon 1999). Again the diverse product range of GOIL is a factor in customer

retention, but it should also be noted that having the product is not just the edge; it is

providing better products and services compared to other OMC’s. So if an OMC would

offer the same product it GOIL should offer a better quality product, and if the quality is

perceived as the same then it should resort to other factors in the marketing mix to mean

more to a customer.

This importance of CRM and as previously stated is to develop customers into partners

rather than just plain customers (Bowen and Shoemaker, 2003) this is highly applicable

to the OMC’s in Ghana where there so much to choose from. If a customer sees many

OMC’s available he would then just mindlessly choose one OMC over the other if there

is no proper CRM practiced because in essence all a customer really needs is Gas or Fuel

it doesn’t really matter from what OMC because in most cases one is neither superior to

the other because of standards that OMC’s follow which is also applicable to what

marketing practitioners described as the “customer loyalty ladder” in Customer

Relationship Marketing, in this theory customers could be grouped into subsequent rungs

of a ladder as such; “prospects” or people who have not yet purchased the product and are

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the prospective buyers who the company aims to make an impression on and the

impression most of the times is not the product but the service and after sales service that

matters, in the Oil Marketing industry, this could be a vehicle passing by which is low in

gas or is looking for a rest stop what makes the impression to them was it how they were

treated after the sale or when they needed further assistance, was there a number to call

for help. Then there are the "customer" who has now tried the product and would now

then progress to, "client" this is when the customer then becomes a habitual patron of the

product or brand then would come, "supporter" which is now some one who is

progressively using the product that would then develop to, "advocate" who will now tell

other people or prospective customers about the product, and finally he becomes a

"partner" one who shares in the best interest of the product or brand, the goal of good

CRM practice is to turn a customer from a prospects to advocates , because advocates are

customers who are more than that, they no longer buy the product but also advertise and

encourage others to patronize the product, they feel they have a vested interest in the

brand or product.

So then the defining factor is the CRM practices of the company and this would be the

difference between customers staying satisfied with a company or switching brands, a

company could also make a customer switch with good CRM practices. Other authors on

CRM would also suggest that certain levels of relationship duration would also give

effect to different levels of consumption experience, giving different results, as well as

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satisfaction and loyalty with different relationship marketing tactics. (Wulf et al 2001).

Meaning the longer a customer is with a company the more meaningful their relationship

becomes and the more diverse the effects it would have on both the customer and

company. This would be applicable to GOIL because it has been such an old player in the

Oil marketing industry that it would have had opportunity to nurture long lasting

customer relationships that spans generations since it first started in 1960. According

Buchanan and Giles (1990), long term customers are less inclined to switch over to other

brands and are less critical of pricing and this translates for a steady volume of sales and

that these customers are also more likely to try out other products in a company’s profile.

How the would a company strive to make long time customers? The answer is to keep

them loyal and satisfied through pro active CRM practices. The authors also go on to

state that loyal customers tend to be less demanding and easier to satisfy because they are

already familiar with a way a company operates and have no other agenda than to

patronize a product. This though can only be achieved if the customer is a long time

customer and as previously stated already in the “partner” phase of the customer ladder

enunciated earlier in the chapter, there are many rungs to be passed before a customer

reaches this phase but effective CRM practices should ensure customer satisfaction.

Diversity in Products and Services

Even more applicable to the Ghana Oil Industry is the statement that relationship

marketing can be applied when there are competitive product alternatives for a customer

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to choose from (Berry, Leonard 1983) in the ever growing oil industry of Ghana there are

84 OMC’s and counting and there will be more because Ghana is now fast becoming a

power in the African oil industry due to the discovery of vast oil fields, this number of

competitors is a lot since in other countries there are no more than 4 or 5 OMC’s and in a

country that now produces oil it would be very tempting to a customer to try other

OMC’s because as the old adage states that the one who benefits most from stiff

competition is the consumer, because oil products in itself are the same regulated quality

and OMC’s will do literally everything, from aggressive marketing campaigns to going

the extra mile through value added services to gain customers and keep them satisfied

long enough to maintain brand loyalty. So there factors far more diverse than say the

quality of the diesel you buy from OMC A and OMC B, because there would be no

noticeable difference, since fuel is just used to power machines and cars. So when a

customer is retained what is developed? The answer to that is customer loyalty, which in

one study stated that it should be the center of business strategy rather than maximizing

profits and shareholder satisfaction (Reicheld 1996). Based on this assumption customer

loyalty should be the main goal of management above all, but that does not mean profits

and shareholders are not important because customer loyalty and satisfaction pays

dividends and has a trickle down effect on profit and therefore shareholder satisfaction.

So how does a company mean more to a customer? In the case of GOIL as it has done so

by providing value added services like advantage cards or fleet cards, it is providing a

multitude of products from fuel to bitumen to pesticides, it also has advocacies such as

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donating organizations that cater to socially responsible practices and it has also made

full use of the internet with its informative website. But does this have an effect on

customer satisfaction, theoretically they are practicing CRM and the effect will be proven

by gathering data through the next chapters.

In order for one to study customer satisfaction, loyalty and contentment there should be a

tool that needs to be used in order to measure its effects. One such tool was developed by

Parasuarman, A., Zeithaml, V. A., and. Berry, L. L. (1988). This tool is called the

SERVQUAL tool. This is very efficient tool for us to be able to assess service quality.

Despite having 10m different aspects, we are going to be focusing on 5 different aspects

only. They are the following:

• Reliability- which is being able to deliver what is promised about the

service. Examples of this are consistency, quality of service and product

quality (Parasuarman, Zeithaml and Berry 1988).

• Assurance- is the ability of the employees to foster trust and confidence to

the customers. Are they competent enough? Are they knowledgeable

enough? Are they trustworthy? These and many more are the

considerations in this area (Parasuarman, Zeithaml and Berry 1988).

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• Tangibles- as the name implies, these are the physical aspects of the

service. This can include facilities, tools and even the appearance of its

employees (Parasuarman, Zeithaml and Berry 1988).

• Empathy- this is the attention and care given to customers. Getting this

message across is very important to the customer; this is a way of making

the customers feel important and pampered (Parasuarman, Zeithaml and

Berry 1988).

• Responsiveness- This is a very important aspect as it deals with how

personnel are ready, willing and able to respond to a customer’s concern

(Parasuarman, Zeithaml and Berry 1988).

These are the variables that will be addressed in the data gathering section of this study.

As we progress through the study we will be able to prove if GOIL is able to provide

satisfaction to their customers and gain their loyalty.

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CHAPTER THREE

METHODOLOGY

3.0 Method

The study’s aim is to determine whether Customer Relationship Marketing plays a major

role in customer satisfaction in the Oil retailing Industry in Ghana. It will seek to find out

if it is vital for Oil marketing companies to devote time, energy and money in customer

relationship marketing and whether by doing this, they can survive the ever increasing

competition in the industry and grow subsequently. Ghana is one of the Oil producing

countries in Africa. It is the newest country in Africa to tap into its oil reserves.

The unique situation has caused many capitalists to provide funding for new OMC’s to be

set up. This has upset the balance in the OMC industry of Ghana and resulted in the

growing number of OMC’s which is now at 84. In a country whose population is close to

25 million people, the retention of customers is very important. This study is focused on

GOIL and the customer relationship practices that it applies and how it affects customer

satisfaction. Customer satisfaction leads to customer retention and brand loyalty.

Customer retention and brand loyalty is very important in a country that has so many

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OMC’s. This is even more important for GOIL because it is one of the biggest and oldest

OMC’s in Ghana.

a. Research Design

The research is anchored on a survey questionnaire method which aims to study the

determined sample size and on existing condition based on a given set of sample. The

study aims only to understand the nature of the existing condition and is not bent on the

introduction of extraneous variables that may affect the relationship of the existing

variables within the study. The survey method that is utilized is done through the

questionnaire method – the use of questionnaires to gather information from the sample.

Simple random techniques would be employed in selecting the study’s sample size.

Customers will be selected for the study for specific reasons.

Questionnaires will be distributed to customers who are patronizing the GOIL dealer at

that time. The customers will be given ample time to answer the questionnaires to get

more candid results and so as not to have any effect on the subsequent results. A sample

size which signifies 10% of the total dealer population and corporate customers and 5

lubricant resellers which offer a high degree of representation would be chosen from the

southern zone which controls 60% of GOIL’s revenue. The current dealer population

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stands at 150 so we will be distributing these questionnaires at 15 randomly selected

dealers and the 5 lubricant distributors. We have determined that for each dealer we

should get at least 10 usable responses. This number is for us to get at least 200

responses.

Data Collection

Survey respondents were chosen randomly from the customers of GOIL of which the

least age was 18 years old. A group of individuals was hired to hand out the questionnaire

until we achieved 200 respondents. Respondents were asked not to write their names on

the questionnaire and were assured that all responses would be treated anonymously.

Methodological principle to reduce data

We limited the number of questions through factor analysis. Factor analysis is a statistical

technique that shows how fewer questions can capture as much of the information as if

we had a longer questionnaire. This is the value of factor analysis. Basically, the results

indicate which questions can be dropped and still retain most of the information because

the questions are highly related and eliminating questions means you lose only a minimal

amount of the original information. The smaller number of questions also increases the

quality of the information because respondents are happy to answer a reasonable number

of questions, but either refuse to finish a long questionnaire or just put any answer to

finish it.

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Parasuraman, Zeithaml, and Berry developed SERVQUAL to measure service quality

(1988). SERVQUAL was specifically developed for the marketing sector. Since 1988

Parasuraman, Zeithaml, and Berry have fine tuned SERVQUAL as a response to the

needs and suggestions of various researchers who have used it.

b. Variables

This study on the effects of Customer Relationship Marketing practices on customer

satisfaction among the customers of Ghana Oil Company Limited has two variables. The

independent variable in this study would be the CRM methods that Ghana Oil Company

Limited implements. This variable is not affected by any other variable and that which

exerts an effect on the dependent variable. The dependent variable would be the resulting

customer satisfaction, retention and loyalty that are the result of the CRM practices by the

company. From this customer satisfaction we will be using the measurement Service

Quality.

c. Data Gathering Tools

The study made use of questionnaires with open and closed questions for primary data

collection from customers. A self administered questionnaire was used so that the

respondents can use their free time to answer the question without being time pressured

29

so as not to affect their answers. It has been proven that questionnaires administered in

this manner are more convenient and provide more candid answers as opposed to when

the respondent is time pressured.

Closed questionnaire steers clear of discrepancies in the responses and at the same time

allow respondents to freely express their views on the subject matter. Part 1 of the

questionnaire was divided between what the customer expected as being provided and

what they actually experienced. Part 1 to 3 of the questionnaire was given a rating of 1 to

7, 1 being the response not at all and 7 being to a very large extent to the questions posed.

Part 4 was used to gather other data such as demographics and other background

information about the customer. The subsequent data gathered was inputted into database

and analyzed using SPSS.

30

Dimensions Definition Items in scale

Reliability The ability to perform the promised service dependably and accurately

7

AssuranceThe knowledge and courtesy of employees and their ability to convey trust and confidence

7

TangiblesThe appearance of physical facilities, equipment, personnel and communication materials

7

Empathy The provision of caring, individualized attention to customers 7

Responsiveness

The willingness to help customers and to provide prompt service 7

d. Treatment of Data

SERVQUAL instrument

The instrument of survey/questionnaire used was focused mainly in

determining the following dimensions;

After the survey, data were put on a database and analyzed using SPSS

software. In our model (figure 1) we put the results together by assuming that service

quality is the gap between the expectations from visitors in relation to what they

actually experience. Service quality is thus represented by the following function:

(SQ) = (Expectations – Experiences). Using this formula the software generated a

number of ratios that we labelled SQ1a, SQ1b, SQ1c, SQ1d, SQ2a…SQ3n…SQ4n.

31

Figure 1 Quality Model

GOIL

32

Table 1. Age of Respondents

Number of Respondent %

18-25 Years 53 26.5%

26 - 35 Years 55 27.5%

36 - 45 Years 38 19.0%

46 - 55 Years 31 15.5%

56 - 65 Years 18 9.0%

65 - Older 5 2.5%

CHAPTER FOUR

4.0 Results and Analysis

In Table 1 and 2 presents background information about the respondents. We examined

the groups and if there was any reason to suspect differences within these groups. None

of our controls indicated that we should go further in these analyses.

We wanted the respondents to be at least 18 years old. In our sample we find a relatively

well balanced distribution between the ages 18-66 years (see Table 1). This would attest

to the wide ranging appeal of GOIL among a wide range of the adult population.

33

Table 2. Gender and Social Status of Respondents

Gender Social StatusNumber of

Respondent % Total %

Male Married 56 28.0%

Shared Household 28 14.0%

Single 32 16.0%

Female Married 40 20.0%

Shared Household 28 14.0%Single 16 8.0%

58.0%

42.0%

There is fair distribution of GOIL customers by gender (58% male vs. 42% female) and

most of them are married with 48% followed by shared households with 28% and the

24% are single.

The results are discussed below and show the results of the model with five dimensions

of servqual (= expectation – experienced). The dimensions were compared using t-test to

determine the significance of service quality.

On table 3 shows the overall statistics (N, mean, std. dev, std error mean) of servqual

(experienced vs. expectations)

34

Table 3. Servqual Dimensions Statistics

800 6.04 .567 .020800 4.68 .692 .024800 5.96 .645 .023800 4.97 .677 .024800 5.45 .807 .029800 4.99 .691 .024800 5.24 .746 .026800 4.85 .811 .029800 5.42 .664 .023800 5.03 .663 .023

P-EExperiencedExpectationExperiencedExpectationExperiencedExpectationExperiencedExpectationExperiencedExpectation

tangibility

reliability

responsiveness

assurance

empathy

N Mean Std. DeviationStd. Error

Mean

On table 4 shows the significance of each dimension showing the F,P (sig) and t value,

df, Mean difference (experience – expectation), std error difference, and confidence

interval at 95%. Tangibility, responsiveness, and empathy shows to be significant with F

and P value of (160.65, 0.000), (125.06, 0.000), and (70.79, 0.000) respectively while

reliability and assurance are not, though GOIL still get a positive mean score on this

dimension which means they still satisfied their customers.

35

Table 4. Independent Samples Test of Servqual Dimensions

160.658 .000 42.880 1598 .000 1.36 .032 1.294 1.418

42.880 1538.805 .000 1.36 .032 1.294 1.418

2.230 .136 29.977 1598 .000 .99 .033 .926 1.056

29.977 1594.338 .000 .99 .033 .926 1.056

125.057 .000 12.246 1598 .000 .46 .038 .386 .534

12.246 1561.403 .000 .46 .038 .386 .534

2.289 .130 10.009 1598 .000 .39 .039 .314 .466

10.009 1586.743 .000 .39 .039 .314 .466

70.794 .000 11.716 1598 .000 .39 .033 .324 .454

11.716 1597.997 .000 .39 .033 .324 .454

Equal variancesassumedEqual variancesnot assumedEqual variancesassumedEqual variancesnot assumedEqual variancesassumedEqual variancesnot assumedEqual variancesassumedEqual variancesnot assumedEqual variancesassumedEqual variancesnot assumed

tangibility

reliability

responsiveness

assurance

empathy

F Sig.

Levene's Test forEquality of Variances

t df Sig. (2-tailed)Mean

DifferenceStd. ErrorDifference Lower Upper

95% ConfidenceInterval of the

Difference

t-test for Equality of Means

To test the servqual model each item per dimensions were also analyzed to determine it’s

significant. On table 5 shows the overall statistics (N, mean, std. dev, std error mean) of

sub-dimension of servqual - Tangibility (SQ1a, SQ1b, SQ1c, SQ1d), Reliability (SQ2a,

SQ2b, SQ2c, SQ2d), Responsiveness (SQ3a, SQ3b, SQ3c, SQ3d), Assurance (SQ4a,

SQ4b, SQ4c, SQ4d), and Empathy (SQ5a, SQ5b, SQ5c, SQ5d).

36

Table 5. Group Statistics of Each Sub‐items per Dimension

DimesionSub‐item P ‐ E N Mean

Std. Deviation

Std. Error Mean

Experienced 200 6.145 0.5965 0.0422Expectation 200 4.955 0.5426 0.0384Experienced 200 5.975 0.3536 0.0250Expectation 200 4.78 0.5414 0.0383Experienced 200 5.95 0.7071 0.0500Expectation 200 4.405 0.6023 0.0426Experienced 200 6.07 0.5353 0.0379Expectation 200 4.575 0.8935 0.0632Experienced 200 6.21 0.5360 0.0379Expectation 200 5.145 0.6212 0.0439Experienced 200 6.18 0.5088 0.0360Expectation 200 5.225 0.5883 0.0416Experienced 200 5.54 0.6861 0.0485Expectation 200 4.72 0.6509 0.0460Experienced 200 5.91 0.6031 0.0426Expectation 200 4.785 0.7009 0.0496Experienced 200 4.98 0.7086 0.0501Expectation 200 4.805 0.8664 0.0613Experienced 200 5.935 0.7094 0.0502Expectation 200 5.24 0.7315 0.0517Experienced 200 5.215 0.6331 0.0448Expectation 200 4.96 0.5096 0.0360Experienced 200 5.67 0.8027 0.0568Expectation 200 4.955 0.5238 0.0370Experienced 200 5.66 0.6216 0.0440Expectation 200 4.875 0.7225 0.0511Experienced 200 5.17 0.6506 0.0460Expectation 200 4.99 0.7434 0.0526Experienced 200 5.29 0.8482 0.0600Expectation 200 4.805 0.8837 0.0625Experienced 200 4.825 0.5883 0.0416Expectation 200 4.715 0.8646 0.0611Experienced 200 5.085 0.7073 0.0500Expectation 200 5.05 0.7071 0.0500Experienced 200 5.685 0.5265 0.0372Expectation 200 5.14 0.7571 0.0535Experienced 200 5.085 0.4678 0.0331Expectation 200 4.965 0.4057 0.0287Experienced 200 5.81 0.5706 200.0000Expectation 200 4.955 0.7110 200.0000

sq5c

sq5d

Tangebility

Reliability

Responsiveness

Assurance

Empathy

sq4a

sq4b

sq4c

sq4d

sq5a

sq5b

sq2c

sq2d

sq3a

sq3b

sq3c

sq3d

sq1a

sq1b

sq1c

sq1d

sq2a

sq2b

37

On table 6 shows the significance of each sub items per dimension showing the F,P (sig)

and t value, df, Mean difference (experience – expectation), std error difference, and

confidence interval at 95%. For tangibility the sub items sq1a, sq1b, sq1d are significant

in servqual; for reliability only sq2d is significant; for responsiveness sq3a, sq3c, sq3d

are significant; for assurance only sq4d is significant; and for empathy sq5b, sq5c are

significant. The significant value were determined by it F and P value of table 6. If F is

greater than 1 and P is less than 0.05 the parameter/item is said to be significant else if

one of the two conditions were met is said to be insignificant.

38

Table 6. Independent Samples Test of Each sub‐item per Dimension

Tangebility sq1a Equal variances assumed 8.320 0.004 20.871 398.000 0.000 1.190 0.057 1.078 1.302Equal variances not assumed 20.871 394.493 0.000 1.190 0.057 1.078 1.302

sq1b Equal variances assumed 82.434 0.000 26.137 398.000 0.000 1.195 0.046 1.105 1.285Equal variances not assumed 26.137 342.628 0.000 1.195 0.046 1.105 1.285

sq1c Equal variances assumed 0.678 0.411 23.523 398.000 0.000 1.545 0.066 1.416 1.674Equal variances not assumed 23.523 388.182 0.000 1.545 0.066 1.416 1.674

sq1d Equal variances assumed 132.151 0.000 20.298 398.000 0.000 1.495 0.074 1.350 1.640Equal variances not assumed 20.298 325.542 0.000 1.495 0.074 1.350 1.640

Reliability sq2a Equal variances assumed 0.001 0.982 18.356 398.000 0.000 1.065 0.058 0.951 1.179Equal variances not assumed 18.356 389.648 0.000 1.065 0.058 0.951 1.179




Responsiveness sq3a Equal variances assumed 9.256 0.003 2.211 398.000 0.028 0.175 0.079 0.019 0.331Equal variances not assumed 2.211 382.921 0.028 0.175 0.079 0.019 0.331




Assurance sq4a Equal variances assumed 1.166 0.281 11.648 398.000 0.000 0.785 0.067 0.653 0.917Equal variances not assumed 11.648 389.317 0.000 0.785 0.067 0.653 0.917



sq4d Equal variances assumed 50.767 0.000 1.488 398.000 0.138 0.110 0.074 ‐0.035 0.255Equal variances not assumed 1.488 350.747 0.138 0.110 0.074 ‐0.035 0.255

Empathy sq5a Equal variances assumed 0.139 0.709 0.495 398.000 0.621 0.035 0.071 ‐0.104 0.174Equal variances not assumed 0.495 398.000 0.621 0.035 0.071 ‐0.104 0.174




Lower Upper

95% Confidence Interval of the Difference

Dimesion Sub item

Levene's Test for Equality of Variances

Std. Error Difference

t‐test for Equality of Means

F Sig. t dfSig. (2‐tailed)

Mean Difference

39

On table 7 and 8 shows the statistics (N, Mean, Std dev, std. error mean) and t-test (t, df,

P (sig. 2-tailed), lower and upper confidence interval of the difference @ 95%) of

Satisfaction and Loyalty based on the serve qual model on figure 1 - Sat1, Sat2, Sat3,

Sat4 for satisfaction; and Loy1, Loy2, Loy3, Loy4 for loyalty. The same with the five

dimension GOIL company gets a significant positive views from the customer with

average score of ~>4.0 (1 to 7 ranking and 1 being the lowest) – based on the P value

<0.05.

Table 7 One-Sample Statistics for Sub-items of Satisfaction and Loyalty A

N Mean Std.

Deviation

Std. Error Mean

SAT1 200 4.36 .695 .049

SAT2 200 4.19 1.049 .074

SAT3 200 4.96 .841 .059

SAT4 200 5.16 .916 .065

SAT5 200 5.23 .788 .056

LOY1 200 3.93 .865 .061

LOY2 200 4.80 .937 .066

LOY3 200 4.74 1.025 .072

LOY4 200 4.39 .918 .065

40

Table 8 One-Sample Test for Sub-items of Satisfaction and Loyalty B

Test Value = 0

t df Sig. (2-tailed)

Mean Differenc

e

95% Confidence Interval of the

Difference Lower Upper

SAT1 88.738 199 .000 4.36 4.26 4.46

SAT2 56.513 199 .000 4.19 4.04 4.34

SAT3 83.368 199 .000 4.96 4.84 5.07

SAT4 79.687 199 .000 5.16 5.03 5.29

SAT5 93.918 199 .000 5.23 5.12 5.34

LOY1 64.226 199 .000 3.93 3.81 4.05

LOY2 72.396 199 .000 4.80 4.66 4.93

LOY3 65.348 199 .000 4.74 4.59 4.88

LOY4 67.688 199 .000 4.39 4.27 4.52

Overall the GOIL is doing well in terms of their service quality. The relationship of

customers’ expectation against experience has a mean value of greater than zero (SQ =

expectation - experience) as show in Table 4. This study also shows that most of the

customers are satisfied on their service and that the GOIL already got the customers trust

41

through loyalty with the survey mean score of greater than four (also shown in table 4) –

rating score range is 1 to 7, and 7 being to the large extent.

However there are several limitations that need to be acknowledged and might affect the

total service quality of GOIL. The data were collected in a small though important

number of customers. The questionnaires were distributed during the summer months and

the location of the facility does have a longer drive. It is possible that customers availing

GOIL products in shorter drive and on different seasons might have different perceptions

of the service quality. Also, the measurement of customers’ perceptions was limited to a

single GOIL attributes or branch only and might be different to the other branches.

42

CHAPTER FIVE

5.0 Discussions and Conclusions

As we come to a close in this study we again go back to the questions that were posed in

the beginning of the study. That is to determine if the kind of CRM activities that Ghana

Oil Company Limited is engaged in is effective in keeping its customers satisfied, content

and loyal to the company. The results of the questionnaires would point to the affirmative

especially with the tangibles which are the equipment and facilities that they have.

Among the five dimensions, GOIL got the highest score on tangible area and are

consistently positive SQ. While the four remaining areas are the most unstable area (as

shown on estimate of table 4) with estimates of negative value, these can be attributed to

difference of treatment from different employee. Possible tasks for GOIL to make

consistent on the four areas are, training to employees, better benefits, and reward system

to employees – though that is already outside the scope of this study.

There are points of improvement though, but the difference though is not too big. There

are things that need continual improvement like training. These are but normal in a

company like GOIL. What we recommend is for GOIL to balance its CRM methods and

for it to get the buy in of its employees who are the “face” of the company. If it does

more to take care of their employees then the effect would trickle down to the service that

these employees provide to their customers. In hindsight GOIL despite of its age has not

fallen behind, but it must not forget to use everything in its arsenal to remain relevant.

43

5.1Limitations and Future Research

This study was undertaken to take stock of how one Oil Manufacturing Company was

faring in terms of customer satisfaction by way of its CRM practices. Our study has quite

a few limitations. One of these was that it was limited only to one OMC which is GOIL.

It would have been much better if we were able to peg the data taken from other OMC’s.

Another limitation was the sample size that we were able to get, it would have been much

better if the study covered a wider range of GOIL customers. And yet another was the

instrument that was used togather and measure the data. Future reaserch can be done with

these in mind in order to have more data and come up with other conclusions that could

add the knowledge already available for these kinds of studies. Customer satisfaction is a

very broad concept, it would be nice if we can explore other aspects of such in the future.

44

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